Your redundancy rights: The UK

Is there a requirement for employers to legally justify redundancies and if so, what reasons do they need to provide?

Yes, an employer would need to prove that there is a genuine redundancy, which occurs where:

The employer's business, or part of the business, has ceased to operate; and/or

The employer's business has moved to a different place; and/or

The business's need for work of a particular type to be done has ceased or diminished.

What is the statutory minimum notice period for redundancies (if any)?

Although you can agree specific notice with your employer which forms part of the terms of your contract of employment, there are statutory minimum notice periods which apply once redundancy consultation has taken place. These are:

Between 1 month and 2 years - 1 weeks’ notice required

Between 2 and 12 years - 1 week for every year worked up to a maximum of 12 weeks

What is the statutory minimum calculation for redundancy payments (if any)?

You need to be employed for 2 years with the same employer to be eligible for a statutory redundancy payment. The amount of the payment is calculated using a formula based on how long you have worked for your employer, your age and your weekly wage.

The weekly pay, which will be used to work out the redundancy payment, will usually be your normal weekly gross pay at the time you were made redundant, up to the maximum limit, which is £430 as from 1st February 2012. This is increasing to £450 from 1st February 2013.

The present maximum statutory redundancy payment is £12,900.

According to law, what are the main steps that employers must take during a redundancy process?

Your employer needs to identify a genuine redundancy situation. Unless you are in a unique role, there then needs to be a transparent selection process and criteria where you are scored against your peers in a matrix that usually includes skills, needs of the business, and length of service. You need to also be properly consulted on the redundancy and minimum time periods apply for large scale redundancies. You should also be considered for any suitable alternative roles.

What are the consequences for employers who fail to comply with redundancy laws? What kind of compensation can employees claim, and is the amount capped?

In short, you would have a potential claim for unfair dismissal. This can apply when your employer fails to follow a proper process, or if the redundancy was not a fair reason for the dismissal (or both). You are entitled to a claim a basic award based on your length of service, weekly wage and age, together with a compensatory award which is essentially comprised of your past and future loss of earnings. The present cap on the basic award is £12,900 and the cap on the compensatory award is £72,300.

Statutory minimums aside, what is the standard practice for making redundancies and calculating payments at banks in the UK?

There is no ‘standard’ as such, but many banks operate on a redundancy payment based on 1 month for every year worked.